How To Teach Kids About Money at Every Age! — Part 2

Want your kids to do better than you financially? Want them to keep a budget and invest in their future? Financial education is key.    While it’s never too late to learn, the earlier you learn financial literacy, the greater the long-term impact. That’s why we've compiled money methods to teach your kids about finances at every age.

Last week we talked about ideas to teach toddlers through the fifth grade about money.  This week we go all the way to high school.

Sixth to Eighth Grade

At this stage, you’ve established a lot of great money principles for your middle-schooler. The next stages focus on expanding on those basics concepts with income, budgeting and contentment.

• Income
  What do you want to be when you grow up? The question at younger ages elicits a cute response. By middle school, though, it’s a real conversation about the need to find a career that will support you for a lifetime. Explore different job options and discuss both their responsibilities and their paycheck. This is also a good opportunity to explain why your salary isn’t how much you take home. Explain taxes, Social Security, insurance premiums, and other deductions from your paycheck.
• Budgeting
  While your child doesn’t need a personal budget right now, it’s a good idea to learn how to set one. Include them in your budgeting, asking for input on financial decisions like meal planning for the grocery budget.
• Contentment and giving
  “Mark got a new iPhone. I need one too!” It’s easy to compare ourselves to others, and for pre-teens and teenagers, the pressure is even greater. Kids at this age need to learn contentment — being satisfied with what they have rather than trying to keep up with the Joneses. Even better, they need to learn to appreciate what they do have. If they don’t already, kids should understand the benefits of giving back and donating to charity. Volunteering or donating items is a good lesson for all of us.

  Looking to check your child’s financial literacy progress? Jump$tart Coalition created national standards for educators to set financial literacy goals. It’s a good goal for parents too. The benchmarks by eighth grade include:

  1. Set spending priorities to reflect goals and values.
  2. Discuss the components of a personal spending plan, including income, planned savings and expenses.
  3. Compare saving strategies, including “Pay Yourself First” and comparison shopping.
  4. Illustrate how inflation and interest can affect spending power over time.
  5. Justify the value of an emergency fund.
• High-Schoolers
  Teenagers are looking for and need new levels of independence. It’s not long before they are off on their own. Many of the lessons at this stage are firsthand experiences with a checking account and budgeting for college.

• Personal accounts:
  While your teen may not use the traditional check register you learned with, every teen needs to know how to balance a checking account. Personal checking and savings accounts do not establish credit, but they do show an ability to handle your finances. While a checking account is all a teenager technically needs, it’s a good idea to open a savings account as well (if you haven’t done so already) so they can include deposits to both accounts in their budget and see firsthand the impact of compound interest.
• Credit cards:
  Our society relies heavily on credit cards, which can have their benefits. However, they may also include high fees and interest charges, even more so for those with limited or no credit history. Teenagers must learn the dangers of credit cards and how to use them wisely. Teach them to pay off the balance and avoid buying things they can’t pay off each month. A good way to explain interest charges is to look at the interest a bank pays you on a savings account versus what a credit card charges you to use their money. Investigate student credit cards together to learn which one is the right one for your teen.
  
• Paying for college:
  The cost of college is skyrocketing, and so is student debt. As you and your teenager prepare for the next step, compare the costs together, and discuss how you’re going to pay for college. Not every high schooler needs to go to college, and some schools are much more expensive than others. Along with college options, research available scholarships and loans. The decisions you make now will influence the rest of your life.
  

Learning how to handle money is a lifelong process. However, the earlier your child embraces good financial habits, the more likely they are to find financial success.

(Partially reprinted from www.moneygeek.com)